The Impact of the Global Financial Crisis on Industry Growth

This article investigates the real effects of the recent global financial crisis by using industry panel data across 82 countries. We find that industry growth indicators experienced a sharp drop following the crisis. However, a closer inspection indicates that an adverse effect is pronounced in industries that are more dependent on external finance, and also in those industries that rely on trade credit due to under-developed financial intermediation. It is also found that low- and lower-middle-income countries tend to experience a lesser impact on growth. These findings provide new evidence of the negative externalities associated with credit-market friction.